Introduction to special issue #6: Commercial applications of the Internet
First Monday

Introduction to special issue #6: Commercial applications of the Internet by Mark A. Fox



This paper is included in the First Monday Special Issue #6: Commercial applications of the Internet.


In the first quarter of 2006, estimated e-commerce retail sales were $24.5 billion (U.S. Census Bureau, 2006). If we look at e-commerce sales as a percentage of total retail sales over time we find that there has been a significant increase from 1999 to 2006. The blue line in Table One contains figures that are adjusted to account for seasonal variation and holiday and trading-day differences, This clearly shows that e-commerce sales continue to, quarter-after-quarter, make up a greater percentage of overall retail sales—from 0.6% of total retail sales in 1999 to 2.6% of total retail sales in the first quarter of 2006. Clearly, not all electronic commerce involves business-to-consumer sales, but this does show that e-commerce is increasingly common in the retail sector. Although, having said this, it is apparent that the percentage of retail sales that derive from e-commerce is substantially lower than what we may commonly believe.

Table One

Estimated Quarterly U.S. Retail E-commerce Sales
as a Percent of Total Quarterly Retail Sales


Source: U.S. Census Bureau (2006).

eCommerce has radically transformed some industries. Perhaps most radically affected have been those industries where the product itself can be delivered via the Internet (e.g, music, software, and, increasingly, movies). Take the example of movie rental. Historically consumers would rent videos or DVDs from local video stores. However, with the development of the Internet, services such as Netflix offer consumers the convenience of having DVDs delivered directly to their home, while at the same time having a wider selection than would be possible in any traditional video store. Technology such as that used by Netflix also allows for the creation of a powerful online community. Within that community members can contribute by reviewing movies, by recommending movies to friends, and can see the movies that friends have on their rental queue. Netflix’s business model took away the need for physical stores and seriously undermined the value propositions of major brick-and-mortar players, notably Blockbuster (Epstein, 2006).

While Netflix used technology to good effect to disrupt the existing business model for video rental, services such as Vongo.com take that model one step further, by providing movies delivery on-demand over the Internet on a subscription and a pay-per-view basis. The success of iTunes with music delivery has demonstrated how consumers are willing to forgo a physical product (compact discs) for a virtual product (music files) that offers increased convenience, broad product selection and convenience. Movies, like music, need not be delivered to consumers in a physical form. However, like the music industry it is inevitable that the movie industry will also face threats from the availability of their products in a virtual (file) form. Peer-to-peer file sharing, arguably, detrimentally affected sales for the music industry. Attempts to protect music from illegal piracy failed or backfired (Fox, 2006). With the increased storage capacity of computers, and high-speed Internet connections, it is inevitable that the movie industry will also have to increasingly grapple with issues of piracy. On the one hand, the Internet has created new delivery options, but inhering to these new possibilities are threats to those companies who engage in e-commerce.

Despite their complexity, the issues faced by companies using the Internet for commercial purposes are hardly new. In this Special Issue, we collect papers about commercial applications of the Internet. This Special Issue can be viewed as a companion to Internet banking, e-money, and Internet gift economies .

In compiling this issue I attempted to find a cross-section of papers from First Monday’s vast array of published works that had some bearing on eCommerce. The selection of papers is necessarily eclectic and interesting. At the suggestion of a colleague, Dr. Nancy Duncan, I asked authors to reflect upon their original work and to comment on developments since their works were published. Hence, the Special Issue starts off with a series of reflections from authors of some of the reprinted papers. I am immensely grateful for the thoughtfulness of these authors in commenting on their original works. In some cases, these commentaries go beyond mere reflection and include more recent work by the authors themselves. End of article

 

About the author

Mark A. Fox is Professor of Management & Entrepreneurship in the School of Business & Economics at Indiana University South Bend.
Web: http://mypage.iusb.edu/~mfox1
E-mail: mfox1@iusb.edu

 

References

Edward Jay Epstein, “ Hollywood's New Zombie: The last days of Blockbuster,” Slate, 9 January 2006, at http://www.slate.com/id/2133995/?nav=fo, accessed 18 June 2006.

Mark A. Fox, 2006. “Another Nail in the Coffin for Copy-Protection Technologies? Sony BMG’s XCP and MediaMax Debacle,” Entertainment Law Review, volume 17: forthcoming.

U.S. Census Bureau, “Quarterly Retail E-Commerce Sales, 1st Quarter 2006,” May 18, 2006, at http://www.census.gov/mrts/www/data/html/06Q1.html, accessed 28 June, 2006.

 


 


Contents Index

Copyright ©2006, First Monday.

Copyright ©2006, by Mark A. Fox.

Introduction to special issue #6: Commercial applications of the Internet by Mark A. Fox
First Monday, Special Issue #6: Commercial applications of the Internet (July 2006),
URL: http://firstmonday.org/issues/special11_7/intro/index.html





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